Maybe the Thiel Fellowship Is Doing More Good than Some Critics Think

The Thiel Fellowship program has been one of the most widely criticized bits of philanthropy since it was announced back in 2010, with the likes of Larry Summers calling it “the single most misdirected bit of philanthropy this decade,” and plenty of media outlets noting that the biggest thing to come out of it so far has been sprayable caffeine.

The most recent news from a Thiel Fellow, however, is a bit more heartening. It comes from 2013 Fellow Thomas Sohmers, whose startup, REX Computing, justunveiled a new type of server that is "2,500 percent more power-efficient for the same performance [as traditional servers],” according to Sohmers. Sure, this is the type of advancement that the free market is already really good at creating on its own, so it’s unclear why a $100,000 fellowship from Thiel was necessary to make it happen, but at least it’s got some social benefit. It could help make it easier to bring greater computing power to developing countries, and may have a major impact on things like mobile health or computer labs.

There’s no question the Thiel class of 2013 has a lot of potential—in addition to Sohmers, there are several fellows working on using technology to improve education, health care, copyright and patent laws, and more. One of the most promising is Riley Ennis, whose biotech company, Immudicon, is pursuing a vaccine technology that teaches immune cells to recognize and remove tumors, and who will also be using his fellowship to explore technology that will monitor changes in the body and maintain data across diseases, helping to catch many forms of disease in the early stages, when they are more easily treatable, or even preventable.

While this and a number of other projects seem like smart philanthropic investments, several, like Sohmers’, are a bit more questionable. Take James Schuler, the youngest Thiel Fellow for 2013, and co-Founder of Fund Elevator, a crowdfunding platform for political causes and politicians that is currently in beta. 

There’s no doubt Schuler has noble intentions: “Using our platform,” he says in an interview with a Thiel staffer, “we can eventually eliminate special interest groups by letting the people fund candidates, therefore ending corruption.” His project might have some social benefit. But considering the number of crowdfunding platforms already in existence, and the technology already available for candidates to raise money online, it hardly seems unique. More importantly however, it won’t actually address the central issue he is focused on, which seems to be stopping special interest money from having undue influence over elections. The only real way to do that is through legislation aimed at campaign finance and electoral reforms.

Overall then, it's a bit of a mixed bag. And of course Thiel himself is quick to point out that it’s still too early to measure the success or failure of his program.“Startups take about seven to 10 years to achieve liquidity events,” he says, “and the major benefits of a college education don’t fully kick in for about 20 years.”

He’d also be quick to point out, no doubt, that Thiel fellows have already raised $55.4 million from angel investors, created 30 apps and 135 full-time jobs, and brought clean water and solar power to 6,000 Kenyans. Not bad, but then one has to wonder what else could have been done with money spent on the Thiel Fellowship?

At least Thiel admits he doesn't have all the answers. “In many ways it is harder to be an effective philanthropist than anything else in business," he once said. "As an investor and as a founder, you’re in the discipline of making money. Within a non-profit context, it’s harder to evaluate whether what you’re doing makes sense day by day. There’s an enormous amount of money wasted in the non-profit sector, and it’s very important to figure out how to do things better.”

Considering that as many as half the projects pursued by Thiel Fellows seem to be problems the free market is already working to solve anyway, it can be argued that a fair amount of Thiel's philanthropy is wasted, too. And the part that isn't wasted? We'll just have to wait and see what comes out of it.